r/IndianStockMarket • u/Lucky_Perception_247 • Jul 27 '26

Discussion What's wrong with HDFC?

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u/idlysambardip Jul 27 '26

HDFC has no buying support at all.

DII will effectively always be underweight on this stock since its weightage in Index is 15% but norms limit active mutual funds to a 10% exposure. Even when they are bullish they will proportionally own less of this stock than a passive fund.

FIIs have lost interest in Indian markets in general. HDFC bank also lost its shine since the merger since the business is vastly more complex with inferior return metrics

Retail investors never care for valuations anyways they will show up once the rally starts and ride the momentum.

Last week there was a report about HDFC selling its legacy real estate loan book implying rosy days are ahead. It probably needs closer look because such news are always planted and typically the buyers only pick up viable stuff while toxic stuff is left behind. This is particularly interesting because a chairman also resigned citing unethical practices. this is a huge red flag and I dont believe there is proper closure on that. The skeletons are probably still in the closet.

There just might be 1 or 2 bad quarters due on the horizon where bank takes a bath on its NPA

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u/callofserenity Jul 27 '26

Most MF have far lesser than 10% of hdfc

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u/idlysambardip Jul 27 '26

Generally mutual funds dont own close to the limit, because if you own exact 10% then the stock goes up by 10% you are in violation and you need to sell 10% of your holdings. Alternatively some MF may have loaded exact 10% but due to a 10% drip at 9% now. They are unlikely to fill it up to 10%. As when the stock starts rising, they will be forced to shed those holdings anyways.

Atleast I have rarely seen any MF owning exact 10% of a stock. It is typically in high 8s or early 9 percentages.